Economics, History and Optimism

One of the readings we had to go through was an article on The Freeman by Stephen Davies. Essentially, he brought up a time in history where city planners of the late 19th century were panicking over the amount of horse manure caused by transportation, projecting that cities would be covered in it in the future. He brings up two points: Humanity will find solutions to problems it is facing through our ingenuity and that the future cannot be predicted. He states that people will adjust themselves accordingly if you give them incentives and reasons for doing so. The main incentive being high prices, in true economic fashion.

Price is not always monetary.

In a 3rd year class I took, we were studying economic history. I noted that throughout the course, there existed the same kind of optimism about crisis, that humans had the ability to eventually, successfully manage themselves. Perhaps the social science has always been this way, starting with Adam Smith's invisible hand. Anyway, I'd just like to leave two quotes from A Concise Economic History of the World that I feel are related.

"With a given technology...the resources available to a society set the effective upper limits to its economic achievements. Technological change, however, allows those limits to be expanded..."(11)

"...it was the shortage of timber for charcoal that led to the use of coke for smelting iron ore. There are many other instances where temporary or localized shortages of particular resources have given rise to substitutes, which often turn out to be more efficient or economical."(402)

"The technology does not yet exist to [use] solar energy directly in more than trivial amounts . But as conventional sources of power become scarcer -that is, as their prices rise-the inducement to engage in research directed to solar energy will increase. That is the way the economic mechanism functions. The possibilities are limitless."(402)

Going into this stream, the optimism of the subject really surprised me. Of course, things are always more complicated in real life than in theory. But throughout human history, humanity more or less seems for follow this pattern, so it makes a suitable guideline, I think.

References after the jump.



Resources
Cameron, Rondo and Neal, Larry. (2003) A Concise Economic History of the World. New York: Oxford University Press Inc.